Recommendation: Buy Blackstone (BX). Key Investment Points Dividend play with embedded call option...

Recommendation: Buy Blackstone (BX)

Key Investment Points

• Dividend play with embedded call option on prosperity

• Increasing AUM despite low stock price

• Big real estate player

•Dividend immune to proposed new tax law

•More value today than a year ago

•Improving operating cash flow

Industry Overview

•Focus on operational excellence, growth, performance, risk management, and compliance

•Asset Management CEOs most optimistic out of any industry

•Very capable of adaptation and reinvention

•Transition taking place in risk taking

•Opportunities are plentiful

Blackstone (BX) Company Profile

Prev Close: 13.631y Target Est:

17.50

52wk Range:

10.51-19.63

Avg Vol (3m):

3,884,600

Market Cap:

6.59B

P/E (ttm): N/AEPS (ttm): -.35Div & Yield: 0.40

(3.10%)Forward P/E:

Investment Information

3 Year Price Graph (Morningstar)

SWOT analysis, and how each point impacts company EPS/valuation multiple

SWOT Analysis

StrengthsScale and brandBreath of business linesProven investment processStable, consistent investment team

WeaknessesUncertain realization cycleMore opportunities to buy than sellUnrealized mark to market losses in PE and RE

OpportunitiesBroad network of relationships to find dealsEuropean asset salesVolatility and value dislocation Significant “dry powder” to useFuture Performance Fees

ThreatsGrow to big to fastProlong period of low realizations (stock remain range bound)Key management and relationships leave the firm

Book Value

Investment Thesis

•We should own this stock due to guaranteed revenue from increasing AUM, call option on performance fees, solid dividend, and improved valuation.

Sector : Alternative Industry Group: Asset Management Current Holdings: ODMX, PRPFX, MOO,GXG Target Sector Allocation: 10%, $43,765 Current Sector Allocation: 8.1% , $35,158 Remaining Allocation: 1.91%, $8,318

BUY 400 shares of BX at Limit Price of $13.50 (approx. $5,400, 1.24% of portfolio)

Allocation after purchase: 9.32%

Portfolio Placement / Recommendation